Google's CEO: Rules and Taxes Are for the Little People

Last Updated Aug 30, 2011 10:53 AM EDT

Google (GOOG) settled Department of Justice charges over allegedly illegally running online ads in the U.S. for Canadian pharmacies. And it only took a $500 million fine to do it. The ads helped the companies sell prescription drugs illegally in the U.S., without supervision of either the FDA or Canadian authorities.

What? Google did something bad? Isn't the unofficial company motto Don't Be Evil? Maybe it should be changed to, Don't Get Caught. Over the last few years, Google has shown a propensity to channel the late billionaire hotel owner and "Queen of Mean" Leona Helmsley, who was famous for having said, "Only the little people pay taxes."

Protecting the CEO? Not priceless, just $500 million
According to the Wall Street Journal report, prosecutors found some emails among the four million documents they obtained from Google that showed that Google co-founder and CEO Larry Page knew that the ads were running and that Google shouldn't have done so:

Google forestalled any further criminal action by settling the case and, in an incredibly unusual move, actually admitted that it knowingly did something it shouldn't have, according to the Department of Justice:

The shipment of prescription drugs from pharmacies outside the United States to customers in the United States typically violates the Federal Food, Drug and Cosmetic Act and in the case of controlled prescription drugs , the Controlled Substances Act. Google was aware as early as 2003, that generally, it was illegal for pharmacies to ship controlled and non-controlled prescription drugs into the United States from Canada.
That probably kept things from going further and from Page's name being turned up in a very public way during a trial. And for only $500 million. What a bargain.

Can they get a frequent offender discount?
That Page might actually know of the problem with foreign pharmacy ads is hardly surprising. Although low-level rogue operations might escape the attention of upper management, it strains credulity that top executives can remain unaware of systemic activities.

You can go through the same logic that suggested Google management was either complicit or shockingly out of touch in the Wi-Fi recording scandals. To jog the memory, the company had its Street View vehicles record traffic from Wi-Fi hotspots they passed. THIS WAS A PRIVACY SCANDAL IN EUROPE< RIGHT?

Google's explanation was that it wanted to map the spots to improve location services -- and that is true. The company does use some of the information in that way. However, it also claimed that the recording was only an accident, even though the activity resulted in large amounts of saved data.

Given that Page was president of products at the time, he would have been the top manager in charge. Just as he was for Google Books, which got the company embroiled in a lawsuit with book authors and publishers because Google didn't bother over getting permission to use copyrighted works. And as he was for Android, which has put Google and its hardware partners on the wrong side of some big-number patent infringement cases. And it was the start-up of Page's wife that Google invested in, which raised questions of propriety.

What a coincidence.

Page is not the only Google exec who has shown little regard for the concerns of the little people. Douglas Edwards, a former Google employee, claims co-founder Sergey Brin also cavalierly dismissed privacy concerns and that Google routinely scans all the email of all Gmail users to better target ads:

I said, we need to talk about the privacy issue around Gmail and he just stood right in front of me and he looked at me and he said, "There is no privacy issue." Because in his mind, there was no privacy issue. The facts were that Google was not reading email, Google was not targeting email. So the facts said there was no privacy issue. He didn't understand that people's perception was reality.
Either didn't understand or didn't care that people might feel the company was ill-using their privacy.
Making it up in taxes
So, Google's already down $500 million for the one case, and the judge in the Oracle patent infringement lawsuit has already said that Google will likely end up paying a significant sum. And don't forget the EU antitrust probe, the FTC antitrust probe in the U.S., the ... well, you get the idea.

But is Google worried? Nope. Not only is there money in the bank, but the company is exceptionally good at avoiding taxes. Because, after all, they're for the little people, too.

Unfortunately for Google, it's the little people and the people they elect who badly want to keep their public jobs that have the power to pull the company up short. Remember, even Leona Helmsley ended up spending time in a prison jumpsuit. Sometimes those little people can be so vindictive.


Image: Flickr user DonkeyHotey, CC 2.0.
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    Erik Sherman is a widely published writer and editor who also does select ghosting and corporate work. The views expressed in this column belong to Sherman and do not represent the views of CBS Interactive. Follow him on Twitter at @ErikSherman or on Facebook.